Regulations

Breaking TNCs Down To The Basics

From a purely news and content standpoint, the topic of Transportation Network Companies (TNCs) is the gift that gives and never goes away. LCT readers clearly are fixated on the issue, and paying close attention.

I know this for sure because when we look at the visitor traffic to our website, LCTmag.com, we see the most engagement for content items related to TNCs. Yet, while Uber and TNCs are automatic news, information on solutions to the problems they’re causing is the bigger and better story. While we need to know about the drama and disruptions of TNCs, the follow-through to confront and resolve those problems should predominate.The latest TNC developments stir some hopeful rumblings:

Wage Wars: The strongest incentive for regulatory fairness among TNCs and other forms of ground transportation will be the question of whether TNC drivers are employees or independent contractors according to federal law. A TNC cannot sustain its business model of I/C drivers and cut-rate pricing if it must follow the same labor rules as W-2-employee-based limousines companies. Two federal cases are winding their way through California courts that could provide landmark legal rulings on Uber and Lyft. Already, two federal judges have said they believe TNC drivers are employees, not independent contractors. As of this writing, limousine and taxi operators await formal rulings that could be legally sweeping.

You don’t have to look very far in the limousine industry to find examples of companies bludgeoned into the employee business model. In the last seven years, aggressive federal regulators and opportunistic trial lawyers with token chauffeur plaintiffs killed off the independent contractor model for many operations. If there should be one silver lining to this sorry chapter, it will be that regulators and trial lawyers will go after TNCs. As Music Express CEO Cheryl Berkman pointed out at a Feb. 10 Greater California Livery Association meeting: Why should TNCs be exempted from the rules and legal limits that were foisted onto limousine operators?

A TNC cannot offer this level of safety and comfort.

Safety Salvation: While labor issues are likely to make inroads on the legal front, strong safety education will win the public relations war. TNC safety troubles mount day by day with a constant stream of criminal acts against passengers. It doesn’t look good when a business service has to offer “panic buttons” to its clients. Could you imagine being handed a “panic button” when you check into a hotel, board a charter bus, or sit down in a movie theater? Limo and taxi operators are explaining how their services surpass TNCs in safety, as seen with the launch of the Who’s Driving You (www.whosdrivingyou.org) campaign from the Taxicab Limousine & Paratransit Association and the Ride Responsibly (www.rideresponsibly.org) campaign from the National Limousine Association. Just as numerous limousine operators took to their local news media outlets with a positive safety message in the wake of the fatal stretch limousine fire of May 2013, it’s now time to promote the industry’s superior safety practices compared to TNCs.

Fair Play: For all the government bungling and ineptitude we’ve seen in how to define and regulate TNCs, we should give credit where it is due. On Feb. 10, the Broward County (Fla.) Commission voted unanimously to regulate TNCs like taxis. Thank you, but what took you so long? There’s the answer to the TNC challenge: Regulate them like taxis or limos, but not anything new or in-between. In hindsight, California’s creation of a separate TNC category could prove problematic. Even if TNCs must meet the same rules as charter party carriers, the fact that they are in a separate category could make it easier to exempt them from rules going forward. The takeaway lesson from Broward County is that TNCs are transportation companies, not technology. So, why not apply the same rules?

Clever Competition: At the same GCLA meeting where Berkman spoke, Empire CLS executive Joey Phelps underscored some competitive points about service and pricing. He advised operators to compromise neither, as a high-quality chauffeured service with honest, stable pricing fundamentally defines the limousine industry. He shared some numbers on how his company has seen revenues rise during the advent of TNCs by following those core principles. Limousine services that sell out to TNC work not only incur more labor and legal risks, but they undercut their industry colleagues. Meanwhile, NLA President Gary Buffo, who owns Pure Luxury Transportation in Petaluma, Calif., launched his own local app-based on-demand transportation service called BlinkCar in February. It works like a TNC, except it runs as a legal and licensed charter-party carrier in California with the high operational standards of a professional chauffeured transportation company. Those would include driver training and background checks, (W-2) employee pay and benefits, maintenance and cleaning of vehicles, and thorough insurance coverage. BlinkCar is one way to take on TNCs and outcompete them.

From labor, to safety, to regulation, to competition. If operators keep advancing in those areas, we could be looking at the four limo horsemen of the TNC apocalypse. Giddyap.